Nobody cares about gold! Funds pull out to seek thrill elsewhere

By Luzi Ann Javier Hedge funds are pulling out of gold bets as more exciting moves in equities and cryptocurrencies make safe-haven investments look boring. Money managers cut their bets on a bullion rally at the fastest pace in five months as prices head for their worst quarterly loss in a year. Speculators are throwing in the towel as the metal failed to sustain the gains that took futures to a one-year high in September. While the metal posted some modest gains recently, its performance still pales in comparison to the record-breaking rally of U.S. equity indexes and the dizzying surge in bitcoin. Synchronized global growth and prospects for higher U.S. interest rates hurt the appeal of non-interest bearing gold, while geopolitical tensions failed to spur enough haven demand. “Nobody cares about gold right now,” said Joe Foster, who manages the $670 million VanEck International Investors Gold Fund from New York. “With the stock market marking new highs, everybody’s talking about bitcoin, nobody needs a safe-haven asset in this environment. But I think it would be foolish not to have an allocation to gold because it has a very low correlation to stocks and it’s a hedge against systemic financial risk.” In the week ended Dec. 12, money managers reduced their net-long positions, or the difference between bets on a price increase and wagers on a decline, by 43 percent to 80,453 futures and options, according to U.S. Commodity Futures Trading Commission data released three days later. That’s the lowest since July 25. Open interest, the tally of outstanding futures contracts on the Comex, fell on Dec. 14. The drop came even after the Federal Reserve stuck to its projection for three interest-rate increases in 2018, easing concerns policy makers would be more aggressive. Investors are retreating as as the 60-day historical volatility of gold futures languishes near the lowest since 2001, limiting opportunities to make money from actively trading the metal. Even bullion’s loyal customers are shying away. In India, the second-largest market for the metal, imports were said to have slumped for a third month in November as demand slowed. In China, the top buyer, the central bank hasn’t added to its gold reserves since October 2016, data compiled by Bloomberg show. And in the U.S., monthly coin sales slumped 23 percent in November from a month earlier and since April have been hovering near the lowest since 2015. The precious metal has been under pressure from rising U.S. interest rates and improving odds that President Donald Trump’s plan to cut corporate taxes will finally get Congressional approval. “It’s hard to get excited about gold, or any other asset if every time you jump into it, expecting it to respond in a certain way and it doesn’t,” said Cameron Brandt, director of research at EPFR Global, which tracks the fund flows in mutual funds. “If an asset class is not responding to your logic, why risk your career on it.”

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Gold is in the doldrums.
Prices have fallen for six straight weeks, the worst streak in a year, as prospects for higher U.S. borrowing costs damped demand for gold, a for non-interest-bearing asset. Investors don’t seem too optimistic about the outlook for 2017. Hedge funds cut their bets on a rally to the lowest since February, while outflows are ramping up from exchange-traded funds.

Hedge fund bulls accelerated their withdrawal from U.S. natural gas markets as volatility and prices declined on abundant supply.
Speculators cut their net-long position across four benchmark contracts by 11 percent in the week ended Sept. 2, the most in three weeks,
U.S. Commodity Futures Trading Commission data show. Bullish wagers have declined for six consecutive months, the most in data compiled by Bloomberg since 2010. Short positions rose to a nine-month high.

Gold traders are divided on the outlook for prices next week, weighing signs of an improving U.S. economy against the threat of a military attack on Syria. Two years after bullion set a record, the majority said a new peak won’t be reached in the next 24 months.

LONDON: Gold fell on Monday from a three-week high, after the dollar was lifted by Friday's upbeat US jobs data that reinforced expectations that the Federal Reserve will raise interest rates next week. A short-covering rally initially swept the metal higher after the data, which at first failed to significantly lift the US currency. Gold ended Friday up 2.3 per cent, its biggest one-day advance since January, but failed to hold those gains. Spot gold was down 0.9 per cent at $1,077.11 an ounce at 1450 GMT, while US gold futures for February delivery were down $7.70 an ounce at $1,076.20.

Money managers increased their net-long position in gold, silver, platinum and palladium for a third straight week, helping to fuel rallies for the metals amid signs of a flagging US labor market, a drop in German factory orders and a forecast by the International Monetary Fund for slower global expansion. The price gains last week pared losses for 2015 on mounting expectations that sluggish growth will force the Federal Reserve to hold off on raising interest rates, which can curb the appeal of assets like commodities that don't pay interest.

Bloomberg, frequently a fount of anti-gold propaganda came out with a pair of articles on Wednesday, worth a read primarily from a contrarian point of view.
Gold Bull Paulson Cuts SPDR Stake by Half in Bear Market
Bloomberg reports Gold Bull Paulson Cuts SPDR Stake by Half in Bear Market

Gold is in a “bubble” after the best annual run in at least nine decades and will head into a so-called bear market as a stronger U.S. economy helps increase interest rates and cut bullion demand, Societe Generale SA said.